The European Union’s crypto industry is set to face major changes as a group of Green and Socialist Members of the European Parliament have proposed several amendments that could significantly impact decentralized technology, NFTs, Defi, DAOs, and Web3.
Although the measures have the intention of addressing significant problems in the cryptocurrency business, they have also raised fears that they may stifle innovation and development in the industry.
One of the proposals is to limit transfers from non-custodial wallets to 1000 euros for trade and business purposes, unless the beneficial owner can be identified. This would help track illegal activities but may also hinder P2P tech growth and uptake.
Another proposal would apply Anti-Money Laundering (AML) regulation to DAOs and DeFi controlled by smart contracts or voting. This would put DeFi and DAOs on par with traditional financial institutions, but may also reduce the appeal of decentralized solutions.
The Greens and Socialists have also proposed banning anonymous tools and encryption by Crypto Asset Service Providers, making transactions less secure. A similar proposal was embedded in the Council’s negotiation position, so it is likely to be included in the final AML law.
In addition, the Members of the European Parliament want to make it more difficult for crypto asset service providers (CASPs) from outside of the EU to operate inside the EU without complying with AML regulations.
The position of the Conservative, Christian democrat, and Liberal groups will be crucial when the EP Committee votes on the AML regulation. Their position is still unknown, but there is hope that they will maintain the inter-institutional agreement reached in the MiCA and TFR regulations.
